How to Get a Good Credit Score ?

How to Get a Good Credit Score ?

Credit Score - Good credit score is a great indicator of a person's creditworthiness. Such a person is always given priority when they apply for a loan in the bank. A good credit score helps banks and financial lenders to understand the creditworthiness of the loan amount, common interest rates, if any, and the repayment capacity of the customer. 

How to Get a Good Credit Score ?

All lenders, be it financial institutions or banks, approve credit applications only after reviewing the credit score of a particular institution. Some of the popular credit bureaus in India are Experian, Equifax, CRIF High Mark and TransUnion Credit Information Bureau (India) Limited, popularly known as CIBIL. These are reputable credit bureaus, although the calculation of their respective credit scores varies slightly. According to CIBIL, individuals with a credit score of 750 or more are considered to have a good score. The maximum upper limit is 900.

What is a Good Credit Score ?

Credit score is always displayed as a three-digit score, which ranges between 300 and 900. Anything above a credit score of 750 or higher is considered a good score. All financial credit institutions and banks mention such scores to understand the eligibility of individuals whose applications they receive for credit facilities. 

There are many people whose scores are far below the desired level. This may be because individuals have failed to meet their repayments or equivalent monthly installments (EMIs) on time. Sometimes, people miss out on the simple reason of forgetting the said dates,

Benefits of a Good Credit Score

  • Take advantage of low interest rates on various loans
  • incremental credit limit
  • increased conversation
  • Better chances of approval for credit cards and monetary credit facilities

If you maintain a good credit score on an ongoing basis, you will be able to take advantage of lower interest rates on the loans you have applied for. This works to your advantage, as you will be able to pay off your debt faster. It also helps to add some money to your savings.

A weak credit score indicates a higher interest rate. This can create difficulties for the concerned parties who will not be able to negotiate with the lenders to reduce the rate. Good credit score enhances the bargaining power of individuals, who can then apply for better interest rates.

Ways to Improve Credit Score

  • Timely Repayment of Loans and EMIS
  • Maintaining a Good Debt Utilization Ratio
  • Avoid applying for too many credit cards in less time
  • frequent credit score reviews
  • Avoid canceling earlier credit cards

All credit bureaus refer to a person's credit score before approving his loan. If credit history casts doubt on creditworthiness, their credit score is adversely affected. To avoid such a situation, individuals should regularly review their credit scores.

There are some people who make multiple applications for multiple credit cards at short intervals. This not only creates concern with the lending authorities but also causes a sharp drop in their credit scores. Individuals can spend some time to find out the maximum available credit limit based on their eligibility and make practical applications for a viable credit facility.

All credit bureaus refer to a person's credit score before approving his loan. If credit history casts doubt on creditworthiness, their credit score is adversely affected. To avoid such a situation, individuals should regularly review their credit scores.

Post a Comment

Previous Post Next Post